dc.description.abstract | Decentralized finance (DeFi) protocols use blockchain-based tools to mimic banking, investment
and trading solutions and provide a viable framework that creates incentives and conditions
for the development of an alternative financial services market. In this respect, they can be seen as
alternative financial vehicles that mitigate portfolio risk, which is particularly important at a time of
increasing uncertainty in financial markets. In particular, some DeFi protocols offer an automated,
low-risk way to generate returns through a “delta-neutral” trading strategy that reduces volatility.
The main financial operations of DeFi protocols are implemented using appropriate algorithms, but
unlike traditional finance, where issues of value and valuation are commonplace, DeFis lack a similar
value-based analysis. The aim of this study is to evaluate relevant DeFi performance metrics related
to the valuations of these protocols through a thorough analysis based on various scientific methods
and to show what influences the valuations of these protocols. More specifically, the study identifies
how DeFi protocol valuations depend on the total value locked and other performance variables, such
as protocol revenue, total revenue, gross merchandise volume and inflation factor, and assesses these
relationships. The study analyzes the valuations of 30 selected protocols representing three different
classes of DeFi (i.e., decentralized exchanges, lending protocols and asset management) in relation to
their respective performance measures. The analysis presented in the article is quantitative in nature
and relies on Granger causality tests as well as the results of a fixed effects panel regression model.
The results show that the valuations of DeFi protocols depend to some extent on the performance
measures of these protocols under study, although the magnitude of the relationships and their
directions differ for the different variables. The Granger causality test could not confirm that future
DeFi protocol valuations can be effectively predicted by the TVLs of these protocols, while other
directions of causality (one-way and two-way) were confirmed, e.g., a two-way causal relationship
between DeFi protocol valuations and gross merchandise volume, which turned out to be the only
variable that Granger-causes future DeFi protocol valuations. | es_ES |